Intercreditor arrangements in real estate finance transactions

This overview is a guide to the Banking & Finance content within the Intercreditor arrangements in real estate finance transactions subtopic, with links to the appropriate materials.

Intercreditor agreements are frequently seen in real estate finance transactions because many lenders are only prepared to lend up to a specified loan to value (typically in the region of 60–70%, but this can vary according to the nature of the underlying real estate and the ultimate risk profile of the transaction) and often, borrowers require a higher leverage. Mezzanine lenders can assist to fill this funding gap.

While each transaction is subject to commercial negotiation, the mezzanine lender will seek to obtain as broad a set of cure and other protective rights, while the senior lender will seek to restrict the limitations placed on its set of rights and the circumstances in which the mezzanine lender can be protected.

The use of intercreditor arrangements and structural subordination in real estate finance transactions

Often in real estate finance transactions, in addition to the primary loan advanced to fund the purchase of real estate (or refinance existing

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